Intel throws might into chasing mobile market and ARM

Chip maker wants to delve into elusive smartphone, tablet market

After years of dominance in computer chips, Intel now is chasing the chip market and trying to redefine its future.

During Intel's financial analyst meeting Monday, CEO Paul Otellini announced that he is refocusing the company , moving its "center" from PC processors to processors for the burgeoning mobile market . That means Intel will be trying to get a footing in the elusive, yet lucrative mobile market, which encompasses smartphones , tablets and netbooks .

It also means Intel is pulling out all the stops to battle ARM chips, which have taken over the mobile market.

ARM's chips are used in most tablets and smartphones today, making the company an increasingly formidable competitor to Intel, basically blocking the chip giant from getting a solid foothold in the new market.

"I think Intel recognizes that they absolutely have to get a win here," said Rob Enderle, an analyst with the Enderle Group. "All the activity is in mobile. A post-PC era would be a post-Intel era if they don't get a beachhead established. Intel absolutely needs a beachhead and they need to do whatever it takes to get one."

The smartphone and tablet markets have been coming on strong, while the PC market has been struggling. Intel has been badly positioned for the direction in which the industry is moving.

Earlier this month, Intel made a move in this new direction when it unveiled its new 3D transistor technology that is expected to position the chip maker to grab a piece of the mushrooming tablet market.

When embedded in Intel's low-power Atom processors, the 3D transistors should make the chips faster and more power-efficient, and that could be a game-changer for Intel in the mobile devices arena and make Intel's products more competitive with ARM processors.

So on the heels of that 3D transistor news, Intel now is saying that, while it won't be ignoring PC and server chips, it's throwing all its might behind the low-power processors.

"Intel had a choice," said Dan Olds, an analyst with The Gabriel Consulting Group. "There isn't anything out there to make ARM obsolete or stop it. Intel could join ARM and make their own ARM chips or they could make an ARM alternative, which is what they're trying to do. They're betting that Intel's ability to apply the best process technology will enable them to beat ARM at ARM's own game."

And while all the analysts said this isn't gearing up to be an easy fight for Intel to win, it's one it has to wage.

"They can't let a huge chip market like this go unresponded to," added Olds. "Intel also is well aware of the fact that ARM isn't going to stop at phones and tablets. It's on its way up to server-ville and that's a big deal, too. It's not just threatening the cheap laptop. It's going to be threatening the more expensive servers."

Jim McGregor, an analyst with In-Stat, said this won't be a short-term project for Intel. Upping its game to go head-to-head with ARM chips could take Intel several years.

"They are shooting at a moving target that is moving very quickly and aggressively in terms of both hardware and software," McGregor said. "Intel faces many challenges breaking into the mobile market, including business relationships. Intel can be competitive in terms of technology, but it takes an entire ecosystem to compete in the market."

However, Olds also pointed out that Intel won't be starting from zero on this. It already has the low-power Atom processor and the new 3D transistors.

"I think we'll see something significant from them in the next year to 18 months," he said. "This will be incremental. This will be an evolution not a revolution."